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Item 9A. Controls and Procedures

2023-05-30 compared with 2022-05-31 · 42 added, 29 removed, 100 unchanged (42% of the section changed)

2 unchanged sentences

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to reasonably ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of March 31, 2022. Based on that evaluation, our management concluded that our disclosure controls and procedures were effective as of March 31, 2022. 

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures as of March 31, 2023. Based on that evaluation, and as a result of the material weakness described below, our management concluded that our disclosure controls and procedures were not effective as of March 31, 2023. 

Nevertheless, based on the performance of additional procedures by management designed to ensure reliability of financial reporting, our management has concluded that, notwithstanding the material weaknesses described below, the consolidated financial statements, included in this Annual Report on Form 10-K, fairly present, in all material respects, our financial position, results of operations, and cash flows as of the dates, and for each of the periods presented, in conformity with U.S.

Management's Annual Report on Internal Control Over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.

Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Projections of any evaluation of effectiveness for future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. 

1 unchanged sentence

Integrated Framework”

issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013. Based on that evaluation, our management concluded that our internal control over financial reporting was effective as of March 31, 2022. 

Our independent auditor, Plante & Moran, PLLC, a registered public accounting firm, is appointed by the Audit Committee of our Board of Directors, subject to ratification by our shareholders.

Plante & Moran, PLLC has issued an unqualified opinion on the effectiveness of our internal controls over financial reporting as of March 31, 2022, which appears in Item 8. 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

There were two material weaknesses identified as of March 31, 2023:

1) Management's review controls over fair value calculations including Management's preliminary valuation of the Belyntic Acquisition were insufficient.

Specifically, Management failed to utilize resources with an appropriate level of knowledge and expertise in performing and reviewing the fair value calculations including the preliminary Belyntic valuation.

In fiscal year 2023, Mesa's acquisitions of businesses (net of cash acquired and including contingent consideration) totaled $6.1 million. Our auditors, Plante & Moran, PLLC identified errors in the preliminary valuation of Belyntic as part of their audit procedures after the preliminary valuation had been reviewed internally by Management.

2) Management's review controls over the qualitative assessment of goodwill impairment were insufficient to identify potential impairment triggers. 

Remediation Plan for Material Weaknesses in Internal Control Over Financial Reporting

In response to the material weaknesses identified in "Management's Reporting on Internal Controls Over Financial Reporting," we, with the oversight from the Audit Committee of the Board of Directors, developed a plan to remediate the material weaknesses.

Our remediation plan will require that, going forward, including for the final valuation of the Belyntic acquisition, Management will utilize a valuation specialist with the requisite knowledge to perform such valuations for all acquisitions of businesses.

Management has committed to formally evaluate and document impairment triggers on a quarterly basis and ensure that such documentation is reviewed by a person competent to perform such a review. 

We believe the use of a specialist with appropriate knowledge and experience valuing business combinations and putting in place a more robust process for identifying and evaluating potential impairment triggering events will effectively remediate the material weaknesses described in "Management's Report on Internal Control Over Financial Reporting." 

Our independent auditor, Plante & Moran, PLLC, a registered public accounting firm, is appointed by the Audit Committee of our Board of Directors.

Plante & Moran, PLLC has issued an adverse opinion on the effectiveness of our internal controls over financial reporting as of March 31, 2023, which appears in Item 8. 

Financial Statements and Supplementary Data 

1 unchanged sentence

Changes in internal control over financial reporting

The Agena Acquisition was completed on October 20, 2021.

The financial results of Agena are included in our consolidated financial statements as of March 31, 2022 and for the year then ended. The Agena business represented $32,840 of revenues and ($7,779) of net loss, respectively, for the year ended March 31, 2022.

As this acquisition occurred in the third quarter of fiscal year 2022, the scope of our assessment of our internal control over financial reporting does not include Agena.

This exclusion is in accordance with the Securities and Exchange Commission’s general guidance that an assessment of a recently acquired business may be omitted from our scope in the year of acquisition.

During the second quarter of fiscal year 2022, we implemented a new human resources information and payroll system, which is considered to be a key system as part of our internal controls over financial reporting. We continued to integrate the software with our processes, systems, and controls in the fourth quarter of fiscal year 2022.

There were no other changes during the quarter ended March 31, 2022 in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. 

The Agena Acquisition was completed on October 21, 2021, and the financial results of Agena are included in our Consolidated Financial Statements as of March 31, 2023 and for the period then ended and as of March 31, 2022 and for the year then ended. During the time since acquisition, we have assessed the control environment of Agena;

made certain changes to Agena's internal controls over financial reporting, including design changes that were required as we brought Agena onto our enterprise resource planning system; and performed testing over the operating effectiveness of Agena's internal controls.

We now consider Agena to be included in the scope of our assessment of internal controls over financial reporting.

Other than the remediation measures discussed above and the incorporation of Agena into our internal controls over financial reporting, there were no other changes during the quarter ended March 31, 2023 in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. 

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Item 10. 

22 unchanged sentences

Principal Accountant Fees and Services

Plante & Moran , Denver, Colorado , PCAOB ID 166 is the Company's independent registered public accounting firm.

Plante & Moran, PPLC , Denver, Colorado , PCAOB ID 166 is the Company's independent registered public accounting firm.

Incorporated by reference from the definitive Proxy Statement for our 2023 Annual Meeting of Stockholders or an amendment to this report to be filed no later than 120 days after March 31, 2023.

1 unchanged sentence

Consolidated Financial Statements

The Consolidated Financial Statements of the Registrant listed on the accompanying index (please see Item 8.

The following documents included in Part II, Item 8.

Financial Statements and Supplementary Data  are filed as part of this Annual Report:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets - March 31, 2023 and 2022

Consolidated Statements of Income - Years ended March 31, 2023, 2022 and 2021

Consolidated Statements of Comprehensive Income - Years ended March 31, 2023, 2022 and 2021

Consolidated Statements of Stockholders' Equity - Years ended March 31, 2023, 2022 and 2021

Consolidated Statements of Cash Flows - Years ended March 31, 2023, 2022 and 2021

Notes to Consolidated Financial Statements 

All financial statement schedules have been omitted either because they are not applicable or required, or the information that would be required to be included is disclosed in the notes to the Consolidated Financial Statements.

Open Market Sales Agreement SM dated April 5, 2022 by and among Mesa Laboratories, Inc and Jeffries LLC (incorporated by reference from the Company's Current Report on Form 8-K filed on April 5, 2022).

Agreement and Plan of Merger by and Among Mesa Laboratories, Inc., Sky Bearer Corp., Agena Bioscience, Inc., and Telegraph Hill Partners Management Company, LLC as the Securityholders’ Representative (incorporated by reference from the Company's Current Report on Form 8-K filed on September 14, 2021).

Articles of Incorporation and Amendments to Articles of Incorporation of the Company (incorporated by reference from Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q filed on July 31, 2018).

6 unchanged sentences

Credit Agreement dated as of March 5, 2021 among the Company, the lenders party thereto, and JPMorgan Chase Bank, N.A., as administrative agent (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on March 8, 2021).

Mesa Laboratories, Inc.

2006 Stock Compensation Plan (incorporated by reference from Exhibit 10.2.1 to the Company's Quarterly Report on Form 10-Q filed on July 31, 2018).

Amendment No.

1 to Credit Agreement dated as of December 22, 2022 among the Company, the lenders party thereto, and JPMorgan Chase Bank, NA., as administrative agent (incorporated by reference from exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on February 6, 2023).

Mesa Laboratories, Inc.

2014 Equity Plan (incorporated by reference from Exhibit 10.2.2 to the Company's Quarterly Report on Form 10-Q filed on July 31, 2018).

Mesa Laboratories, Inc 2021 Equity Incentive Plan

Mesa Laboratories, Inc 2021 Equity Incentive Plan (incorporated by reference from Exhibit 10.2.3 to the Company's Annual Form 10-K filed on May 31, 2022). 

Form of 2014 Equity Plan Option Award Agreement (incorporated by reference from Exhibit 10.3.1 to the Company's Quarterly Report on Form 10-Q filed on July 31, 2018).

Form of 2014 Equity Plan Option Award Agreement as amended (incorporated by reference from Exhibit 10.3.2 to the Company's Report on Form 10-Q filed on July 31, 2018).

Form of 2014 Equity Plan Option Award Agreement as amended (incorporated by reference from Exhibit 10.3.2 to the Company's Quarterly Report on Form 10-Q filed on July 31, 2018).

Form of 2014 Equity Plan Restricted Stock Award Agreement (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 11, 2018).

Form of 2019 Performance Share Unit Agreement, issued under the 2014 Equity Plan (incorporated by reference from Exhibit 10.3.4 to the Company's Quarterly Report on Form 10-Q filed on July 31, 2018).

Form of 2023 Performance Stock Unit Agreement, issued under the 2021 Equity Plan (incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on August 4, 2022). 

Form of 2020 Performance Share Unit Agreement, issued under the 2014 Equity Plan (incorporated by reference from Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q 

filed on July 30, 2019).

Form of 2021 Restricted Stock Unit Agreement, issued under the 2014 Equity Plan

Form of 2021 Restricted Stock Unit Agreement, issued under the 2014 Equity Plan  (incorporated by reference from Exhibit 10.3.6 to the Company's Annual Report of Form 10-K filed on May 31, 2022). 

Form of 2021 Equity Incentive Plan Option Award Agreement (incorporated by reference from Exhibit 10.3.7 to the Company's form S-8 filed on August 30, 2021).

1 unchanged sentence

Form of Confidentiality, Non-Compete and Non-Solicitation Agreement (incorporated by reference from Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q filed on July 31, 2018).

10.5 * α

Form of Executive Employment Agreement (incorporated by reference from Exhibit 10.1 to the Current Report on Form 8-K filed on April 11, 2017).

10.5.1 * α

35 unchanged sentences

Chairman of the Board of Directors

Chief Executive Officer, President,

Chief Financial and Chief Accounting Officer, 

and Treasurer

John B Schmieder

Chief Executive Officer, President, and Director

Chief Financial Officer and 

Chief Accounting Officer, and Treasurer

/s/Jennifer S.

/s/Evan Guillemin

Evan Guillemin

/s/Shannon Hall

/s/ Shiraz Ladiwala

/s/Shiraz Ladiwala 

Shiraz Ladiwala

/s/Tony Tripeny

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures